Financial Toxicity: How Negative Thoughts Impact Your Wallet

7 min
16.05.2023

Many psychology bloggers nowadays talk about toxic relationships, abusive relationships, and what to do about them. But have you ever considered that there is also something called financial toxicity?

What is it?

Financial toxicity is not a term invented by me. The term “financial toxicity” was introduced in 2013 in a study titled “Financial Toxicity and Its Effects on Nonadherence to Cancer Care” by Yousuf Zafar and other researchers. The study was published in the journal “The Oncologist”.

If a person is toxic, we should minimize their influence on our lives, but why? Because they hinder our growth and prevent us from reaching our goals. Their negative thoughts and habits can lead us to failures, additional unexpected expenses, and other problems.

The same goes for financial toxicity. This term describes the negative impact of financial expenses on a person’s financial and psychological wellbeing. Negative financial situations, such as high medical expenses, unforeseen financial risks, or high product prices, can cause anxiety and uncertainty.

Such a condition is dangerous because it can have practical negative consequences, such as failures in debt repayment, loss of property, or limitations on opportunities for personal and financial growth. Also, the deterioration of health due to financial stress.

Who is the cause of toxic relationships in a couple?

Largely, both individuals are. (I’m not taking into account complex cases)

The environment in which we were born, which shaped our understanding of how we should behave and how others can behave towards us, the external conditions now, which tempted us to act in a way that leads to toxic relationships, and… our own thinking, our habits, our desires.

“I don’t deserve better than this.”

“I can’t live without him/her.”

“If I’m not with him/her, no one will want me.”

“I will be able to change him/her.”

“If I do everything he/she says, he/she will be happy.”

“I should be with him/her because we’ve been together for a long time.”

Let’s make some changes, and now…

“I don’t deserve a higher salary than what I currently have.”

“I can’t live without money.”

“If I don’t have money, no one will love me.”

“I won’t be able to change my financial situation.”

“If I do everything my boss (who has more money) tells me to do, maybe he will respect me more and pay me better.”

“I should stick to my old investment strategy because it worked before.”

These are just some examples of thoughts that can lead to irrational decisions and unpleasant financial situations. The reasons often lie within ourselves, in our thoughts about ourselves and the world around us.

How to reduce the impact of negative thoughts on finances?

We need to consider one complex factor. You are always right. If you believe that you don’t deserve better than this, then so be it. If you believe that you can’t live without the person you love, it is partially true as well. Because it truly reflects our feelings. But in reality, you will be able to live without that person. And it’s not diminishing your worth; it’s simply a fact of life.

“I can’t live without money” – partially, it is true. We cannot live without money, as we would rely on others, such as our parents, or potentially face homelessness. But we will still survive. The question is only how exactly we will manage to do so.

The issue with such thoughts is that they often lack a connection to reality or a clear understanding of the context. As a result, these thoughts can lead people to negative consequences. Indeed, irrational conclusions can lead to irrational decisions.

I will never be able to earn a lot of money. In such a case, one tends to overlook career opportunities and ignores potential avenues for improving their financial situation. A person may choose to remain in low-paying jobs or not actively seek opportunities (ignoring or showing disinterest) for professional growth, which limits their income potential.

I don’t deserve financial success. Certainly, the reason behind this conclusion is low self-esteem and a sense of powerlessness. When such unpleasant feelings accompany financial activities or investment decisions, a person tends to make some of their worst choices. Or they may make decisions that involve significant risks, even when subconsciously aware of the potential consequences.

Everything always goes wrong. When there is such a strong belief, you may unconsciously choose situations and act in a way that ensures things always go wrong. So, you mean intentionally ignoring important aspects of your actions or decision-making process.

To have more rational decisions and positive outcomes in your life, it is important to minimize negative thoughts and stereotypes.

How can I do it?

What do you do to minimize toxic relationships?

Do you go to a psychologist to figure out what’s going on? As an option, going to a financial psychologist who has expertise in both finance and psychology (like yourself 😉). Such a specialist will provide you with tools to address your situation or help you understand what’s wrong. Financial psychologists can help you understand the roots of your negative thoughts and develop a healthy financial mindset.

– you study what kind of relationships you desire and what needs to be done to achieve them. Create financial goals and outline each step towards achieving them, but instead of starting from the beginning, start from the end goal and work backward to your current point A. And keep these goals in front of your eyes every day.

– learn to enjoy life every day. Incorporate something each day that brings you joy and inner balance, while minimizing anything that disrupts your equilibrium.

– write down your negative thoughts and seek out positive alternatives. I understand that it may not be the ideal tool for everyone, but sometimes it can be helpful.

– look at those who have achieved what you desire or even those who have achieved something similar. Observe what they do and how they do it, as well as their thoughts and mindset.

– end relationships when necessary. In the context of finance, this could involve ending relationships with credits, mortgages, debts, and other financial obligations when necessary. Strive to learn how to earn more and work towards quickly resolving all debt-related matters

– change your behavior. How do you handle your money? How can you manage your money in a way that increases your wealth and helps you achieve your financial goals?

Exiting toxic and abusive relationships is always painful, but it is better to do it as quickly as possible.